Crystal I have been where you are and it's not good, I'm sorry she and the rest of the family are putting you through this.
There was a book suggested earlier, Toxic In-Laws by Susan Forward, and it's very good, as is her other one, Toxic Parents. I would second the recommendations to read them.
One story in particular stood out to me, a man who won a Christmas skiing trip in a radio competition had his holiday and his relationship ruined by his mother and siblings because he went away for Christmas and they didn't like it. They put him under immense pressure not to go on holiday.
His mother effectively cancelled Christmas ("there's no point in putting up a tree/cooking a turkey/having any presents etc without X here...") and then sat back to play the victim while the siblings phoned him and did all the arguing about ruining what could be their mother's last Christmas (she was 56 I think so hardly in 'last Christmas' territory).
The book says that the man who won the holiday rocked the boat. His family were set in a pattern of keeping their mother happy and he broke it. His mother would have been satisfied either way, if he stayed at home and gone to her house for Christmas, she had won because she was the centre of attention and he was there with her.
But if he went on holiday, she was the poor victim and the rest of her children were fussing over her and taking her side, while he was feeling guilty and wishing he hadn't gone on the trip. It was win-win for her.
The siblings played their part because it's how they had grown up, nobody upsets Mum, and for one person to do it and get away with it, it made them question themselves a bit and people don't like that.
This is what my PILs do. They hand out the bullets so everyone else can fire the guns for them, then when all the noise dies down they can claim that they never wanted any trouble.
And they think that they can say or do the worst things and then pretend it never happens. At best they will say sorry but then go on to justify why they were right and you are wrong. Or, as your MIL has done, they will lie to your face about things you know really happened.
To give you an example, in 2007 we lost our first baby to stillbirth and three days after he was born my MIL put a lot of pressure on me to decide when we might try for another baby, argued with me about the time our son was born and finally asked me if it still hurts to give birth if your baby is dead.
That should have been the point I cut all contact but we were shellshocked and in a mess and it actually took two more years to walk away and reduce contact with her and almost two years more for me and DS to go no contact with her (DH visits occasionally, I have nothing to do with PILs at all).
In those two years we lost another baby to prematurity and MIL demanded to know if she had been born with all of her face or not, she told me my babies didn't count as proper grandchildren because they had died, discussed me with totally strangers and came up with a theory about what was wrong with me, invented reasons for us losing our son and daughter, put our premature daughters photographs in the rubbish and when we finally went on to have DS she started calling herself his mother.
She also told lies about me to the rest of the family and denied ever saying or doing any of the things I've written here, even though other family members had witnessed them.
DS was about 21 months old when we finally went no contact and it was the best thing I have ever done. We moved house as they were also just around the corner from us at the time and seriously, I would suggest that you move if you can.
It's also been very hard. Apart from a fiancé of BIL's, I think I have been the first family member to stand up to her and mean it in over forty years. She's almost 62 now, she was 47 when I met her and even then the family were passing off her manipulative and controlling behaviour as her 'speaking before she thinks' and saying 'she doesn't mean it' or 'she's too old to change.' I'm sorry but I don't think 47 or 62 is too old to change or to not be accountable for your own actions.
But DH has found it hard. PILs cannot believe that I am serious about not seeing them and it's been 3 years since the last time I saw them willingly. They went absolutely crazy when they realised I was sticking to my decision.
The entire family was informed of how evil I was, they actually drove around the country visiting people to show them a letter I wrote in reply to one from MIL as proof that I was a liar. In it I talked about my grief for our children and how much more difficult MILs actions had made our losses. Such as the way she upset DH the day before our son's funeral, because she thought he didn't sound happy enough to speak to her on the phone and so she laid into him about how awful he was to her.
One BIL sent a barrage of abuse by text and phone and so we don't see him either now. Other BIL and SIL (also a DIL) said less but BIL made it clear he was on his mother's side because he refused to ever visit our new house as his parents hadn't been to it, he unfriended me on Facebook and distanced himself from us. He is the one who had a fiancé who stood up to MIL and his response to that was to break the engagement as it was easier than standing up to his parents. I think he found it very hard to see me stand up to them because it made him acknowledge in a small way that he never does.
DH's sister has been quite supportive, although she feels torn between the two. MIL has let it be known that she is very jealous of her daughter and put her under pressure to take sides.
And PILs stalked me. I couldn't leave the house without them following me around the streets, they would sit outside and stare at the house when we were in it, if we were out they knew the very second we were home and the phone was ringing, message after message after message on the answer machine, letters and notes in the post box, following me around shops, driving onto the pavement to stop me walking along it, letters sent to my parents house, our friends being hassled on Facebook etc.
All because someone finally said enough is enough.
Anyway I'm sorry this is so long OP but the main thing I wanted to say is that you are not alone in going through something like this but if you and your DH stick together and stick to what you want to happen, it's worth it. It really is. Even through all of that it was like a weight had been lifted from me.
You can't change someone else, you can only change your response to their behaviour.
If you keep that in mind and you both stick to it, your MIL may realise she has to change herself. Or, like mine, she may not. But you will still be feeling better because you've changed your reactions to her to a way that works for you and your family.